Return on Investment or ROI is a performance measuring tool used to gauge the efficiency of an investment. ROI evaluates the returns generated by a particular strategy or technique as compared to the costs involved in implementing it. Although social media marketing is considered an essential part of digital campaigning, there are mixed reviews about its ROI.

Since a major aim of social optimization is to make a brand more visible and relate to the customers’ needs, it is difficult to quantify its effectiveness.

ROI for Social Media Marketing

Calculating ROI for SMM is a challenge as there is no fixed formula to judge the exact returns of a marketing strategy. A campaign that yields significant ROI for a certain product might generate very poor revenue for another commodity. ROI for social marketing is thus measured not by arriving at an absolute value of revenue, but by assessing whether the strategy fulfilled the goals it had set for itself. You should consider your campaign to be successful in terms of ROI if it has done justice to the resources used to achieve it.

ROI for social media marketing can be measured in different ways according to the aims of the campaign. The three major types of campaigns seek to enhance brand awareness, create increased engagement and promote lead generation.

The ROI for the same can be measured in the following way…

1. Brand Awareness

The goal of this type of campaign is to maximize a product’s visibility by making customers aware of its benefits.

Increased followers, reach and traffic are the key performance indicators for this campaign. The aim is to identify a target group and promote the product with the sheer idea of generating customers’ interest in trying it out. Enhancing brand awareness is of great importance as a product that is not often viewed and discussed on social platforms becomes irrelevant as competing brands take over.

The ROI for this campaign will depend on the actual growth in the performance indicators compared to the time and money invested on it. You have to evaluate whether the marketing campaign has actually given you a wider reach and made customers consider you as a reliable source to procure goods and services.

2. Increased Engagement

Once your brand has been noticed, campaigns to increase customer engagement can boost your product’s performance. The idea is to generate favorable conversations regarding your product among your target audience. Buyer engagement is measured in terms of likes, comments, shares and brand mentions in social media posts.

In order to evaluate your ROI, you should study the degree to which the popularity of your brand has increased during the campaign and whether this interest is evolving into brand loyalty.

3. Lead Generation

This campaign offers gifts and rewards to potential customers in order to increase traffic and get them to subscribe to e-mails. Such campaigns are effective in gaining contact information of customers and creating a hype regarding the product. The ROI is calculated by comparing the price of the reward offered and the actual number of leads it generated.

ROI for social media marketing is not an abstract concept and can be studied in detail to develop better advertising campaigns.